Estonia is known for its economic freedom. The country has some of the most liberal trade and investment laws in the world. The Wall Street Journal and Heritage Foundation’s Index of Economic Freedom 2017 ranks Estonia as one of the freest economies in the World and the most tax competitive country in the world (Tax Foundation).
Estonia is among the leading countries in Eastern and Central Europe for Foreign Direct Investment (FDI) per capita. With transparent governing Estonia has a ranking of 22nd in corruption perception index (scoring 70 out of 100), which offers great potential for international business.
ICT integrations make business administration simple. As an example, the Estonian Taxation Board has launched a new e-revenue service where tax income-returns can be dealt with on the net. There are also excellent e-commerce systems in place in Estonia, with many of the leading banks offering the latest on-line services from personal to commercial transactions. Many companies are using e-billing. Altogether 98% of bank transfers are performed online in Estonia. One could tap into all these possibilities with becoming an e-resident.
Simple and low taxes
Estonia is the most tax competitive country in the world for 3 years in a row. Estonia has a system of low and flat rate taxes. The system is simple and is designed to encourage enterprise and maximize profits. To encourage companies to expand their business all corporate investments are exempted of corporate income tax from January 1, 2000. Estonian tax system consists of national and local taxes. Main national taxes include:
- VAT – 20%
- Social tax – 33% (20% social security & 13% health insurance)
- Land tax – 0.1%-2.5%
Foreign investors have equal rights and obligations with local entrepreneurs. International law and agreements protect foreign investments in Estonia. We have concluded treaties for the protection of investments with 31 countries and agreements to avoid double taxation with 68 countries, including EU.